October 2016

News that a non-union contractor had filed a Lawsuit against IBEW Local 98 and its leader, John Dougherty, made headlines this week. While making fodder for local media, the plaintiffs must bound several legal hurdles before IBEW Local 98 and “Johnny Doc” face any threat of liability.

Background on RICO

The lawsuit was filed under a set of laws known as the Racketeer Influenced and Corrupt Organizations Act (RICO). I have written about RICO’s impact on labor unions on this blog before and predicted that recent federal court cases made RICO claims against more viable. RICO is a Nixon era set of laws that were originally passed to combat organized crime. There is both a civil and criminal component to RICO. (Interestingly, the RICO act remained relatively dormant until then U.S. Attorney Rudy Giuliani began effectively using it to prosecute the mob in the 1980’s.) Although recent decisions have made RICO claims against unions more viable, any RICO claim is still challenging. Indeed, some courts require a plaintiff in civil RICO cases to file a separate RICO case statement detailing its allegations. RICO claims are powerful. Some have called RICO claims a “thermonuclear” litigation device because the law permits the award of trebel (triple) damages and attorneys fees.

The Elements of a RICO Claim

Generally, to prove a civil RICO claim, a plaintiff must prove the following elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Racketeering activity is defined as specific “predicate acts” under the RICO. And, by pattern, the Courts mean two or more. RICO predicate acts are specific and include things such as murder, kidnapping, robbery, bribery, extortion, drug dealing, mail fraud and wire fraud. Bad conduct alone, no matter how salacious, is not a predicate act. The conduct must qualify as one of the specific predicate acts defined in the statute and most of the predicate acts are federal crimes.

The Predicate Acts in the IBEW Case

As outrageous as the allegations are against IBEW, none of those allegations matter if they do not amount to a “predicate act” under RICO. In fact, those allegations appear to be mere window dressing because fighting, intimidation, and name calling are not predicate act. That is not to say they are not crimes. They could be. They just are not predicate acts under RICO. In fact, the plaintiff does not even try to argue that they are. Rather, the specific predicate acts that plaintiff identifies in the IBEW case is extortion under the Hobbs Act and under Pennsylvania law. So, plaintiff has to prove that IBEW attempted to extort him or outright extorted him.

Under state law, extortion requires that someone actually give upproperty or money because of some threat. In the IBEW case, it does not appear that IBEW acquired property from the plaintiff as a result of the threats. Plaintiff does not even plead that happened. Thus, it is not likely plaintiff’s case will be successful under a theory that IBEW violated state extortion laws.

However, under the Hobbs Act, the extortion need not actually occur. Instead, a violation of the Hobbs Act occurs based upon the mere attempt at extortion. The allegation that IBEW violated the Hobbs Act is were things could get interesting.

Thing gets interesting because of another RICO case involving a Dougherty and a labor union – Joe Dougherty in the Ironworkers criminal case. In that case, the defendants moved to dismiss the indictment alleging that the government could not prove a predicate act under the RICO. The predicate act that the government relied upon in that case – the Hobbs Act – is the same predicate act the plaintiff in the IBEW case relies upon.

In that case, the Court refused to dismiss the indictment against the Ironworker defendants based upon inability to use the Hobbs Act against labor unions. The Judge in that case ruled that union can commit a violation of the Hobbs Act when it uses violence and threats of violence to obtain “services which the employer [does not seek]” or unwanted or fictitious work. The Judge that decided that case – Judge Michael Baylson. The Judge in the IBEW case – yep – Judge Baylson.

The Plaintiff’s Specificity Problem

While you might be thinking this is all good news for the plaintiff, not so fast my friend. Courts require civil RICO acts to be plead with specificity. The IBEW plaintiff claims that IBEW tried extorted him in order to obtain “wages and/or other property.” However, the plaintiff does not explain what wages or property IBEW would have obtained from him if the extortion were successful. Perhaps more importantly, it is not clear from the pleading that the attempted extortion to obtain the wages and property happened on more than one occasion or just the day of the fight. It is also not clear if the union’s misconduct was in an effort to extort him or because they just didn’t like him.

IBEW lawyers will surely seize on this and other defects in the pleading in a Motion to Dismiss. If they do, odds are they will be successful. If they are not, then significant precedent will be set. Furthermore, the case will proceed with discovery and things will get very interesting.

About the Author

Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.